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{
    "id": 218047,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/218047/?format=api",
    "text_counter": 97,
    "type": "speech",
    "speaker_name": "Mr. Kimunya",
    "speaker_title": "The Minister for Finance",
    "speaker": {
        "id": 174,
        "legal_name": "Amos Muhinga Kimunya",
        "slug": "amos-kimunya"
    },
    "content": "Mr. Speaker, Sir, our banking sector is currently characterised by small and unviable institutions incapable of investing in modern technology and critical mass of competency required to provide modern and efficient banking services to Kenyans. This has led to dominance of the local banking sector by foreign-owned institutions. In order to encourage the merging of small local banks so as to enable them to expand and compete with foreign-owned banks in terms of resources, technology and services, I propose to raise the minimum capital for banks from the current Kshs250 million to Kshs1 billion to be accumulated over the next three years. Statistics show that most of our banks are already over Kshs700 million in capital and the three years should not be any difficult for them to raise the Kshs1 billion so that we can have a stable banking sector. This will prepare our banking sector players to consolidate their services and ensure efficiency in order to take advantage of the emerging regional opportunities and be able to lend to a bigger clientele. Mr. Speaker, Sir, we have also in the past witnessed the collapse of a number of insurance companies largely attributed to inadequate legislative and legal framework and subsequently, a weak financial base. In order to improve the financial strength of insurance companies, I propose to increase the minimum paid up capital for:- (i) long-term insurance businesses from Kshs50 million to Kshs150 million; (ii) general insurance business from Kshs100 million to Kshs300 million; and, (iii) composite insurance business from Kshs150 million to Kshs450 million. The insurance companies will be required to comply with this new paid up capital requirement in three years' time. Mr. Speaker, Sir, on measures to deepen our capital market development, the Government is conscious of the need to protect the integrity of the Nairobi Stock Exchange (NSE) and to protect the small investors from unscrupulous market players. Therefore, in order to empower the Capital Markets Authority (CMA) to effectively regulate the Capital Markets, I propose amendments to the Capital Markets Act to give the Authority power to levy financial penalties, among other penalties, depending on the nature and magnitude of offences. The penalties have also been enhanced to make them more deterrent and details of this will be in the relevant Bill. Mr. Speaker, Sir, as I also alluded to in my last year's Budget Speech, there is need for further reforms to deepen the money and capital markets. However, this can only happen if the legal impediments caused by the Internal Loans Act are addressed. The said Act does not recognise dematerialised/paperless securities, thus keeping the Government Bond Market behind technological developments. In this regard, I propose to make necessary amendments to the Internal Loans Act and this will go a long way to facilitate the implementation of primary dealership system in the capital markets. Mr. Speaker, Sir, on measures to reform the retirement benefits, in recognition of the invaluable contribution our senior citizens have given in the development of this country, I propose to exempt the monthly pension that is granted to these important persons from tax."
}